How does NCM Capital define and control risk in equity portfolios?
We define benchmark risk as the measurable possibility of losing value or not gaining value when investing in a style similar to a particular benchmark. Risk is measured in terms of S&P ratings and beta characteristics relative to the relevant index. Portfolios are structured to minimize risk: We maintain a sector weight relative to the benchmark that will not exceed twice the benchmark or less than half the sector weight. With individual stock names, we maintain weights of less than 5% or 10%, depending on the discipline.
